Net asset value per share declined to $1.69 from $1.95, primarily driven by significant unrealized losses in the CLO equity portion of the portfolio.

Management attributed the quarter's valuation pressure to a challenging year-end for CLO equity and broader volatility in the U.S. loan market.

The company observed a notable increase in the distress ratio, which rose to 4.34% from 2.88%, reflecting growing concerns within the software private credit and syndicated loan markets.

Investment activity focused on first-lien B2B loans, with $18 million in new purchases aimed at capturing value during periods of market pricing dispersion.

Management noted a general market pushback against the rapid growth of the private credit asset class, contributing to wider U.S. syndicated corporate loan spreads.

The portfolio's performance was impacted by a 265 basis point average decrease in CCC-rated loan prices, despite a slight improvement in B-rated loan pricing.

Oxford Square continues to leverage its structure as a permanent capital vehicle to maintain a long-term investment horizon despite short-term primary market slowdowns.

Management expects to find continued investment opportunities in both primary and secondary markets, despite current volatility-driven slowdowns in primary issuance.

The Board of Directors has established a distribution framework of $0.035 per share monthly for the second quarter of 2026.

Future investment strategy remains focused on maximizing long-term total return by navigating the current environment of elevated liability management exercises.

Guidance assumes a cautious approach to the software sector as the market continues to price in risks associated with that specific vertical.

Recorded $18.3 million in combined net unrealized and realized losses, a significant increase from the $7.5 million loss in the preceding quarter.

The default rate including liability management exercises remains at an elevated level of 3.35%, significantly higher than the 1.23% principal-only default rate.

The company utilized its at-the-market offering program to issue 4.3 million shares, raising approximately $7.9 million in net proceeds during the quarter.

U.S. leveraged loan primary market issuance saw a 27% year-over-year decrease, driven by lower refinancing and LBO activity, though this was partially offset by higher M&A and dividend activity.

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Purchases were primarily concentrated in first-lien B2B loans.

Management is identifying attractive entry points in both primary and secondary markets despite broader market volatility.

Management confirmed that the rise in the distress ratio is directly linked to real concerns regarding the software private credit and syndicated loan markets.

The current environment is creating opportunities to acquire assets at lower prices as the market reacts to wider corporate loan spreads.

The depreciation was principally driven by markdowns within the CLO equity portion of the investment book.

Management clarified that these losses were primarily unrealized, reflecting year-end market conditions rather than realized exits.

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